RayJay Stays Neutral

Callaway delivered an impressive 2018 despite a soft Q4, and its profitability in 2019 will be back-loaded after the shift of new product launches to the second half, Raymond James analyst Dan Wewar said in a Wednesday note.

“It is our opinion that most investors have not yet embraced Callaway’s decision to purchase Jack Wolfskin. Most U.S. investors are unfamiliar with the brand, and given the brand has been owned by private investors, there are not any publicly available financial results to study," the analyst said.

Cowen Forecasts Tough 2019

Cowen analyst John Kernan also reiterated a Market Perform rating on Callaway and lowered the price target from $24 to $18 due to moderation in the category and macro trends.

Last year was a perfect storm for Callaway in which the company outperformed across its businesses, FX was a tailwind and U.S. and Asia golf markets were favorable, driving significant upside to initial guidance, Kernan said. 2019 is expected to be a much tougher year for the company, he said.

“[The first half] will reflect lapping a heavier launch cadence in 1H LY, the timing of investments, acquisition integration, an FX drag and JW losing money in the 1H due to seasonality of its model."